MTROA reveals some details at MD legislative hearing

Monday, May 13, 2024

Several details surrounding the proposed shift of Maryland Thoroughbred racing operations to a not-for-profit entity under the Maryland Thoroughbred Racetrack Operating Authority were revealed during a lengthy March 19 legislative hearing before the House Ways and Means Committee.

It was the first hearing for House Bill 1524, which as written would facilitate the issuance of $400 million in bonds for the reconstruction of Pimlico Race Course and construction of new training center at a yet-to-be-named location. It also would authorize creation of the not-for-profit model that would take effect Jan. 1, 2025.

The MTROA, created last year by the General Assembly, already had announced that 1/ST Racing (The Stronach Group) agreed to transfer ownership of the Pimlico property to the state for $1. Attorney Greg Cross, who chairs the MTROA, told House committee members all agreements with TSG are subject to due diligence.

Under the deal, TSG will license the Preakness Stakes and Black-Eyed Susan Stakes to the state. Cross at the hearing said TSG will receive $3 million in perpetuity plus 2% of pari-mutuel handle from the two most lucrative days of racing at Pimlico each year. There would be a 10-year license that would renew every five years.

TSG would operate the Preakness at Pimlico this year and in 2025, and at Laurel Park in 2026 to accommodate construction at Pimlico. The MTROA and its not-for-profit would assume control in 2027 at the new facility. Outside of those two days, the not-for-profit would be in charge of all racing operations at Laurel and Pimlico beginning in 2025.

Cross said TSG agreed to allow use of Laurel for racing and training “rent-free” for three years (2025-27). He told lawmakers a financial analysis that included information from the TSG indicates Laurel under the MTROA can operate in the black.

“We will run profitably at Laurel,” Cross said. “We believe we can not only make it work but be a success. The horsemen will be responsible for balancing the books.”

Cross said that having two racing facilities that aren’t in the best of shape “is a constant bleed,” and that having one new facility beginning in 2027 would create the ability to be profitable going forward. He also told committee members the MTROA has no intention of asking the General Assembly for future financial assistance.

Cross also said the new not-for-profit entity will assume the the “Maryland Jockey Club” name and employ those currently working for TSG.

A substantial part of the hearing was devoted to questions from lawmakers about the benefits the plan would bring to the Park Heights neighborhood in Baltimore. It was noted the package includes $10 million for “workforce” housing in the Pimlico neighborhood as part of a community development project. There will be no dormitories racetrack property.

The Racing and Community Development Financing Fund, which is the basis for the bond issue, is supported by various revenue streams including money that remains in the State Lottery Fund each fiscal year as well as money from the Racetrack Facility Renewal Account, which was created as part of gaming legislation to provide matching funds for capital improvements. The new bill will shift revenue from the tax on claimed horses (estimated at $600,000 a year) from the state's general fund to the RCDFF.

The legislation calls for the unencumbered RFRA fund balance for Rosecroft Raceway, which is owned by TSG, be transferred to the RCDFF for use by the MTROA, and for only Ocean Downs Casino to receive RFRA money going forward. Standardbred representatives at the March 19 hearing told lawmakers they are not in favor of the plan, in part because if Rosecroft were to close, Ocean Downs would need millions of dollars in RFRA money to winterize its facility should it take on additional racing dates.

Though comments were made during the hearing that Rosecroft, one of the largest simulcast handle generators in the state, may not continue operations, the TSG has not publicly stated its intentions for the facility once the state takes over Thoroughbred racing operations. TSG in 2022 was in negotiations with a real estate developer to purchase the Washington, D.C.-area property but the deal fell through.

HB 1524 was also assigned to the House Appropriations Committee. The 2024 General Assembly session concludes April 8.

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